Up home loan cap to Rs10 lakh for priority sector: RBI to RRBs

“It has been decided to increase the limit from Rs5 lakh to Rs10 lakh for the bank loans extended to non-governmental agencies, approved by NHB for their refinance, for home loans” the RBI said

Mumbai: The Reserve Bank of India (RBI) asked all regional rural banks (RRBs) to double the limit for home loans to Rs10 lakh from Rs5 lakh for consideration under priority sector lending schemes, reports PTI.

“It has been decided to increase the limit from Rs5 lakh to Rs10 lakh for the bank loans extended to non-governmental agencies, approved by NHB for their refinance, for on-lending for the purpose of construction or reconstruction of individual dwelling units...and rehabilitation of slum dwellers,” the RBI said in a notification.

Loans of such nature fall under indirect finance to housing sector as the final disbursement is done through National Housing Bank(NHB) approved non-governmental agencies.

In August 2007, the central bank, kept the ceiling of loan component of Rs5 lakh per dwelling unit for the priority sector lending and since then, the RRBs have been considering the home loan limit up to Rs5 lakh under for the weaker sections of society under priority sector lending scheme.

In view of the shortage of housing for low income groups in major cities and towns, the finance minister in his budget for 2012-13 also proposed to enhance the limit of indirect finance under priority sector from Rs5 lakh to Rs10 lakh.

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Indian Bank, IOB cut lending rates by 0.25%

The separate announcements by Indian Bank and Indian Overseas Bank came a week after RBI reduced policy rate by 0.5%

New Delhi: Indian Bank and Indian Overseas Bank (IOB) slashed lending rates by 0.25%, in line with other lenders, reports PTI.

The separate announcements come a week after the Reserve Bank of India (RBI) reduced policy rate by 0.5%.

The bank decided to reduce its base rate by 0.25% from the existing 10.75% to 10.50% per annum, Indian Bank said in a filing on the BSE.

Similarly, IOB has also cut the base rate to 10.50% from 10.75%.

Base rate is the benchmark rate below which a bank cannot lend. With the reduction in the base rate all kinds of loans would be cheaper by at least 0.25%.

The new rates of both the banks would be from 1 May 2012.

Another public sector lender Punjab and Sind Bank trimmed fixed deposit rates across various maturities in line with the market trend.

The new rates have been effective from 28 April 2012.

The peak fixed deposit rate of the bank has come down to 9.25% from 9.75% earlier.

Following the RBI’s decision to cut key interest rate by 0.5% to 8% in its annual credit policy, several banks including ICICI Bank, IDBI Bank and Punjab National Bank have reduced both lending and deposit rates.

Earlier last week, State Bank of India (SBI) along with five more banks announced revision in their interest rates.

SBI trimmed interest rates on fixed deposits by up to 1% across various maturities. There was upward revision of 0.25% in case of fixed deposits of 180 days.

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LIC Housing to double lending to developers in FY12-13

“We are targeting a 100% growth under loans to developers this year,” LICHF chief executive VK Sharma told PTI after the announcement of its annual results

Mumbai: After keeping away from lending to realty developers for over a year following the bribes-for-loans scam, LIC Housing Finance (LICHF) plans to push up on the segment and is targeting to double disbursals in the high-margin area in the current fiscal, reports PTI.

“We are targeting a 100% growth under loans to developers this year,” LICHF chief executive VK Sharma told PTI after the announcement of its annual results.

During FY11-12, LICHF’s disbursals to developers fell to Rs910 crore as against Rs2,400 crore in the previous year.

Even though loans to individual borrowers grew 18% during the fiscal, the slowdown in project loans was cited as one of the reasons for a drop in net interest margin to 2.44% versus the year-ago period's 3.08%.

Mr Sharma said at its peak, loans to projects constituted for 12% of the company's books which has now come down to above 5%.

“We plan to take it to over 8% through the jump in disbursals to project loans,” said Mr Sharma.

According to Mr Sharma, loans to individuals earn the company an interest of around 11%to 12%, while the same to corporates can get it over 15%.

Courtesy a jump in lending to corporates, and softening of interest rates, Mr Sharma said LICHF is hopeful that its NIM (net interest margin) will regain lost ground and climb up to over 3% during the quarters ahead.

On the individual loan side, Mr Sharma said he expects a 20% increase in spite of fears of a slowdown in activity, and piling up of inventories as a consequence, by focusing on Tier-II and III cities.

Speaking about other forward looking plans, Mr Sharma said the company plans to undertake an institutional share sale by June and will decide the exact timing depending on market conditions.

LICHF has got shareholder approval to sell 4.6 crore shares through the QIP (qualified institutional placement) issue, he said.

At 11:19 am, LIC Housing Finance was trading marginally higher at Rs257.30 per share on the Bombay Stock Exchange, while the benchmark Sensex was marginally higher at 17,343.

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COMMENTS

Aurobindo Banerjee

5 years ago

While investment decisions must be the prerogatives of the companies themselves, PSUs must not lose sight of the fact that the real stakeholders in these outfits are the taxpaying public of the country. This being the fact, though conspicuous by its being negated by the management and the administrative ministries, it would be necessary to incorporate in the terms of loan agreements certain stipulations requiring the builders (who undoubtedly enjoy enormous political support of the political parties, both right and left) to duly take care of the end users of their productys. especially if they happen to be the common public and the end product is to be dwelling units for the ordinary public. In fact, the LICHF must be advised by the MoF to ensure that the end users must be treated as stakeholders in the projects being financed by the company so as to protect their rights vis-a-vis the RTI Act and also the PCA.

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